TPP and drugs: Douglas Pharmaceuticals lawyer sees fishhooks beyond patents

New Zealand generic drug maker Douglas Pharmaceuticals warns that while patents are a concern with the TPP, there are worse fish-hooks that aren’t getting any press, namely provisions around data-exclusivity and patent linkage.

Prime Minister John Key has finally conceded the Trans-Pacific Partnership (TPP) agreement will likely mean more expensive drugs – although taxpayers, rather than patients directly, will absorb the cost as Crown agency Pharmac pays more to big US pharmaceutical companies (aka “Big Pharma”)

Douglas Pharmaceuticals’ inhouse intellectual property counsel, Lynette Stanton, says her company expects the TPP will extend the patent period, or at least make it easier for large drug companies to gain extensions. New Zealand currently has a flat 20-year patent period. Most countries have a 20-year period plus a provision for five-year extensions.

TPP negotiations are secret. The trade deal’s formula for calculating patent terms has not been made public.

But Big Pharma has been lobbying hard for a more favourable formula for calculating patent periods and extensions – which can be granted if a company successfully argues it needs more time to recoup the development costs of a drug. A complication is that the patent clock starts ticking as soon as a patent is granted, but it can be many years after that point before a drug reaches the market.

Ms Stanton says her company, which has been making cheaper generic versions of drugs since 1967, is well braced for the TPP.

After all, the controversial trade treaty has been under negotiation since 2005, and Douglas Pharmaceuticals is hoping for a five-year lead-in time for the new provisions once the TPP is finally signed (what’s billed as wrap-up negotiations are underway in Hawaii this week).

With some adjustment to its timing, and judicious choice of which drugs to copy, Douglas Pharmaceuticals should continue to prosper. In February, managing director Jeff Douglas – the eldest son of founder Graeme Douglas – put the privately-held firm’s annual revenue at $145 million, or around $25 million more than the TIN100 survey estimated in the prior year. He’s shooting for $250 million by 2020.

But although Douglas Pharmaceuticals will be okay, Pharmac will definitely pay more – or at least pay more for longer – Ms Stanton says. The lawyer also notes Pharmac does not cover or subsidise all drugs, especially for those with rarer conditions, meaning some patients will take a direct hit in the pocket.

The data-exclusivity fish-hook
Although the patent issue has got all the press, Ms Stanton says of equal, or greater, concern is the TPP’s provisions around data-exclusivity and what’s called patent linkage.

Data-exclusivity is the period Big Pharma can keep information about a drug to itself. Ms Stanton says the data is crucial because generic drug makers need it to verify their versions of a drug are behaving in the right manner under various parameters. For that, they need access to testing notes and other data collated during the brand-name drug’s development.

Big Pharma is lobbying for the TPP to extend the data-exclusivity period – or the point from which a generic drug maker can register to apply for access to data -- from five years to 12 years.

"Patent linkage"
Patent linkage is where generic drug marketing authorisiation can be delayed while patents are being litigated, “even if it’s a weak challenge,” Ms Stanton says. It’s a common tactic in the US. She’s hoping the TPP won’t bring it here. "It has a chilling effect because however weak a challenge, it can stop a generic being marketed." She notes Big Pharma has the resources for high-rotate litigation. Generic drug makers do not.

Overall, “we’re optimistic. We’ve got faith in New Zealand’s negotiators," the in-house lawyer says.

“Douglas Pharmaceuticals can work around the TPP. But in terms of the New Zealand consumer there will definitely be difficulties."

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